Most missed question on Unit 2

  “If the public wants this football team to remain in this city, then they will buy season tickets.  If they do not, then the tickets will not sell.  However, this organization will not continue to lose money on this team.  If this city does not appreciate what they have, then we are prepared to move to another city where the fans are waiting in expectation for us to come, and they are anxious to pay to see the product we put on the field.”

The above quote is an indirect reference to which of the following?

• Factor Market

• Law of Supply and Demand

• Disagreement over equilibrium prices

• The securi encouraged by a free market system

Mila says “as price increases, demand decreases.”  Mila is

•    correct; that is the law of demand.

•   incorrect; she means demand increases.

•   incorrect; she means quantity demanded decreases.

•   correct; that is the law of supply.

All of the following will shift the demand curve for oranges to the RIGHT except

• An increase in the price of apples, a substitute for oranges.

• An increase in the price of grapes, a substitute for oranges.

• A new technology for orange picking makes harvesting faster

• All of the above shift the demand curve to the RIGHT.

Which of the following will cause a decrease in quantity supplied in the cupcake market?

• Price of cupcakes increase

• Cost of ingredients for cupcakes rises.

• People decide they prefer cakes to cupcakes.

• Government passes new nutritional labeling regulation for cupcakes.

Answer explanation

Correct Answer; The student recognizes that this change in people’s preferences will cause a decrease in demand (demand curve shifts left) which will cause a movement down the supply curve and a decrease in quantity supplied

When buyers and sellers interact in a market, what is the result?

• Over time, fewer and fewer goods are produced because buyers have all they want

• Usually, a market clearing price is determined

• Equilibrium quantities are determinded and then prices are set by the goverment

• Since buyer and sellers are always changing their preferences, amerkets become unstable and unreliable.

   Which statement is true about the circular flow diagram?

• Households are demanders in the product market and suppliers in the factor market

•    Business are demanders in the product market and suppliers in the factor market.

•     Households are demanders in the factor market and suppliers in the product market.

• A     Businesses and households are not components of the circular flow diagram

Answer explanation

House holds buy goods in the product market, but provide labor in the business market.

Interdependence and price leadership are characteristics of firms in wat kind of market structure?

• Monopoly

• Oligopoly

• Monopolistic Competition

• Perfect Competition

Assume Company 1 and Company 2 operate as an oligopoly.  Which statement BEST represents this?

•      They own many different "brands"

• A     They are major corporations with stockholders

• A     They control over 75% of the market

• A     They have products that are different, but are marketed the same way

Heathcorp depends on Bill’s computer skills to keep their company adequately serving its customers so that Heathcorp can continue to earn annual profits.  In exchange, Heathcorp pays Bill a salary that he depends on to pay his bills.  Bill and Heathcorp both pay taxes to help support the government which provides them with protection.  This scenario is an example of

• Economic Interdependence

• Government Regulation

• Capital Investment

• Investment in Human Capital

Which statement is true regarding monopolistic competition?

• A   There is only one seller in the market.

• Producers try to differentiate their products

• A   There are only a few sellers that dominate the market

• A   Everyone in the market is selling identical products